Last September, Francisco was allowed by her bosses to accept a stake in Vator.tv, a start-up that intends to play matchmaker for other start-ups and venture capitalists by showcasing Web videos of those newcomers.

It's unclear how large a stake Francisco received in Vator, which is backed by PayPal co-founder Peter Thiel. In an interview with CNET News.com, she wouldn't disclose the size but acknowledged that she didn't pay anything for her share of the company.

Francisco also acknowledged that she has a hands-on role with Vator, co-hosting with Thiel a regular synopsis of the start-ups making their pitches. Her role in Vator was first reported in a little-noticed posting on gossip blog ValleyWag last fall.

That Francisco was offered and accepted a stake in a company that operates in the industry she has covered for at least a decade is rare among journalists, who usually follow strict rules to prevent even the perception of a conflict of interest. That MarketWatch signed off on the deal is, to some, an even more remarkable sign that big media organizations are bending their traditional rules when it comes to online journalism.

"Good news organizations have checks and balances that protect the independence of the journalist," said Bob Steele, an ethics adviser at journalism think tank Poynter Institute. Steele spoke generally about journalism ethics and did not specifically discuss Francisco's situation.

"Editors challenge reporters who might get too close to sources. Organizational guidelines restrict financial investments to protect against conflicts and competing loyalties," Steele said. "Those standards, practices and guidelines, while imperfect, are still important."

Bambi Francisco

MarketWatch Editor In Chief David Callaway said he gave Francisco his blessing before she accepted the offer.

"Conflicts and potential conflicts are something that journalists deal with every day," Callaway said. "We often have to deal with them on a case-by-case basis and find separate solutions. We feel that the guidelines we set up work."

Francisco is not allowed to write about any of the companies that make pitches through Vator, Callaway said, and she is not allowed to be Thiel's "marketing department," a shorthand way of saying she's supposed to steer clear of writing in favor of Thiel's interests.

Callaway acknowledged that Francisco's business relationship with Vator is unprecedented at MarketWatch. But when it comes to "solutions," Callaway said some of the practices adhered to for decades by traditional newspapers, magazines and television newsrooms may not be relevant in the Internet Age.

"You can't just totally rewrite the rules," Callaway said. "But there needs to be some happy medium...the rigid rules of the past may not always apply to new media. Is there a potential for a conflict in Bambi's case? Yes. Do I think we can avoid it? Yes."

Callaway emphasized that he was speaking only for MarketWatch and not for the entire Dow Jones company.

It already appears that Francisco has had difficulty adhering to the rules Callaway described. On November 7, Francisco wrote about a company called Powerset. The piece was penned two months after Francisco entered into her business deal with Thiel.

"Now I'm not one to get overexcited about a new technology, especially when a company keeps it mysteriously in stealth mode," Francisco wrote. "But in the case of Powerset--which received loads of blogger attention about its existence without any coverage about the actual product--there actually is a lot of substance behind the intrigue...Indeed, searching with Powerset was a far richer and more liberating experience than what you get with the rivals."

About the author

Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
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